The cooling effects of historic volcanic eruptions on world climate are well known but the impacts of even bigger prehistoric eruptions are still shrouded in mystery. The eruption of Toba volcano in northern Sumatra some 73,000 years ago was the largest explosive eruption of the past two million years, with a Volcanic Explosivity Index of magnitude 8, but its impact on climate has been controversial. In order to resolve this issue, we have analysed pollen from a marine core in the Bay of Bengal with stratified Toba ash, and the carbon isotopic composition of soil carbonates directly above and below the ash in three sites on a 400 km transect across central India. Pollen evidence shows that the eruption was followed by initial cooling and prolonged desiccation, reflected in a decline in tree cover in India and the adjacent region. Carbon isotopes show that C3 forest was replaced by wooded to open C4 grassland in central India. Our results demonstrate that the Toba eruption caused climatic cooling and prolonged deforestation in South Asia, and challenge claims of minimal impact on tropical ecosystems and human populations.